I used this option for a few categories in October, to come off the November category budget (i get paid last thur every month, so am a bit inventive with the "monthly" budget concept)
last sync desktop YNAB with iphone YNAB yesterday (31st October) so could only see October budget on iPhone
However on my iphone, when i looked at the budget today (1st November) although the transactions had been applied to the accounts on the iPhone (the desktop version of YNAB had already correctly applied the transaction to the November budget) the money had not been taken away from the category on my iPhone until i sync'd the phone now, (which is now November) - the money appeared to still be on the budget, ie not spent
ie
Petrol £20 for November budget, but spent on 29th October
applied "subtract it from next month's category balance" on Desktop YNAB displaying correctly - budget for month spent
Budget for Nov on iPhone displaying £20
this may not be a bug, but my understanding was that the budget would update itself each month, if say you weren't able to get to the desktop version
I hope this makes sense
Update
iPhone 4S
iOS v5.0
YNAB v1.4.2 (78)
